Former PMC Bank Chief Denied Bail as Investigation Deepens

A Mumbai court has denied anticipatory bail to Joy Thomas, the former Managing Director of Punjab and Maharashtra Co-operative (PMC) Bank, as authorities investigate allegations of financial misconduct that contributed to one of India's largest banking scandals. The decision by Additional Sessions Judge N G Shukla centers on Thomas's alleged role in unauthorized transactions that occurred during his tenure at the now-defunct financial institution.

The ruling represents the latest development in a case that has drawn attention to regulatory oversight failures in India's cooperative banking sector, where millions of depositors lost savings following the bank's collapse in 2019.

Background and Context

The Punjab and Maharashtra Co-operative Bank crisis emerged in 2019 when the Reserve Bank of India discovered that the bank had allegedly concealed bad loans amounting to approximately Rs 4,355 crore through fictitious accounts. The revelation triggered a run on deposits and exposed systemic vulnerabilities in the cooperative banking framework that operates with less stringent supervision than commercial banks.

Following the bank's collapse, Unity Small Finance (USF) Bank acquired PMC Bank in 2022 under a restructuring scheme supervised by the Reserve Bank of India. During the acquisition process, USF Bank's forensic examination allegedly uncovered additional irregularities, leading to fresh criminal complaints against former executives, including Thomas.

Key Figures and Entities

Joy Thomas, who served as PMC Bank's Managing Director until his removal in 2019, faces multiple legal proceedings related to the alleged fraud. According to court filings reviewed by investigators, Thomas exercised substantial control over the bank's operations, with authority to approve significant financial transactions. His lawyers have challenged various charges in previous court appearances, arguing that responsibility should be shared among board members and other executives.

The Enforcement Directorate, India's financial crime investigation agency, has been involved in tracking assets allegedly connected to the fraudulent transactions. Additionally, the Central Bureau of Investigation has conducted parallel inquiries into the broader conspiracy aspects of the case.

Legal and Financial Mechanisms

The current bail application focused specifically on a 2018 transaction involving Rs 14.5 crore paid to a construction company for office space in Panvel, Mumbai. Prosecutors allege that Thomas authorized this payment without proper board approval, violating banking regulations that require collective decision-making for expenditures above certain thresholds.

According to the First Information Report (FIR) filed by USF Bank, this transaction represents one of several instances where Thomas allegedly bypassed established governance protocols. The court's denial of anticipatory bail cited concerns that Thomas, given his former position, could potentially influence witnesses or tamper with evidence if released.

The legal framework governing cooperative banks in India falls under the Banking Regulation Act, 1949, which was amended in 2020 to strengthen RBI's supervisory powers. However, critics argue that these reforms came too late to prevent the PMC Bank collapse.

International Implications and Policy Response

The PMC Bank case has prompted discussions about the need for enhanced transparency in India's cooperative banking sector, which holds approximately 10% of the country's total banking assets but operates with less stringent reporting requirements than commercial banks. International financial monitoring bodies have pointed to such regulatory gaps as potential vulnerabilities in the global financial system.

In response to the crisis, the Reserve Bank of India has implemented stricter audit requirements for cooperative banks and increased scrutiny of large-value transactions. Additionally, the Indian Parliament has considered legislation to create a unified regulatory framework for all banking entities, though reforms remain pending.

Sources

This report draws on court filings from the Additional Sessions Court in Mumbai, statements from the Reserve Bank of India, and reporting by Indian financial news organizations covering the PMC Bank case between 2019 and 2026.